Continuing its hot streak of double-digit increases, H&E Equipment Services total equipment rental revenues of $291.5 million in the second quarter of 2023 compared to $227.6 million in the second quarter of 2022, a 28.1-percent increase. Total revenues in the second quarter were $360.2 million compared to $294.7 million in the second quarter of 2022, a 22.2-percent jump. Rental revenues were $258.7 million in the second quarter compared to $201.2 million a year ago, a 28.6-percent hike. Used equipment sales totaled $39.7 million, compared to $18.8 million a year ago, an increase of 110.6 percent.
New equipment sales declined 58.8 percent from $21.5 million to $8.9 million. Parts sales dropped 25.6 percent and service revenues slipped 19.8 percent.
Gross profit totaled $168.4 million in the second quarter of 2023, compared to $132.3 in the second quarter of 2022, a 27.2-percent leap. Rental rates in the second quarter of 2023, excluding One Source, were 7.1 percent better than the rates for the second quarter of 2022. Income from operations for the second quarter of 2023 was $69.5 million, or 19.3 percent of revenues, compared to $50.7 million or 17.2 percent of revenues in the second quarter of 2022.
EBITDA totaled $166.5 million, an increase of 36.6 percent compared to $121.9 million. EBITDA gross margins improved to 46.2 percent of revenues compared to 41.4 percent a year ago. Dollar utilization of 40.6 percent compared to 40.9 percent in the second quarter of 2022 and 38.6 percent in the first quarter of 2023.
Average rental fleet age on June 30, 2023, was 42.5 months compared to an industry average age of 50.3 months, the company said.
Superb financial achievement, Barber says
“Further rental rate improvement and strong execution of growth initiatives led to another quarter of superb financial achievement," said Brad Barber, CEO of H&E. "Our second quarter results included records for rental revenues, which increased 28.6 percent from the year-ago measure, and gross profit. Rental rates were 7.1 percent better than the same quarter in 2022, while improving 1.1 percent on a sequential quarterly basis. Through the first six months of 2023, rental rates were up 8.2 percent compared to the same period in 2022. Our rate performance, which excludes One Source, remains among the best in the industry. Physical utilization in the quarter reached 69.3 percent, 390 basis points below the extraordinary measure of 73.2 percent recorded in the year-ago quarter, while increasing 200 basis points on a sequential quarterly basis. Dollar utilization of 40.6 percent in the quarter was essentially unchanged from the year-ago measure, while improving 200 basis points from the first quarter of 2023. Finally, robust revenues and gross margin in our used equipment sales underscore the exceptional opportunities available for this segment of our business.
"We achieved substantial progress in the quarter with business expansion initiatives focused on our rental fleet and branch network. Gross capital investment in our rental fleet totaled approximately $247 million, representing a record quarterly outlay for the company. At the close of the second quarter, the size of our rental fleet, as measured by original equipment cost, totaled approximately $2.6 billion, a 30-percent increase when compared to our OEC on June 30, 2022. Also, we continued our focus on branch expansion with the opening of six new locations in the quarter. These locations, which improved our branch density in the Mid-Atlantic, Southeast, Gulf Coast, and Intermountain regions, increased our branch count on June 30, 2023, to 126 locations across 29 states, representing branch growth over the last year of 19 percent.”
Barber added that resilient nonresidential construction demand through May 2023 resulted in a 17-percent improvement in year-over-year customer spending growth, according to the U.S. Census Bureau.
“As a result, healthy project backlogs remain in place, and we expect them to be sustained through 2023, with positive implications for 2024,” Barber added. “Also, an increase in the number of large-scale projects serve as a likely catalyst for further construction spending and expansion across the equipment rental industry. Construction of these private and federally funded projects, which include sizable manufacturing installations and public infrastructure programs, are active throughout our geographic footprint and represent a growing component of our project mix. We expect the combination of strong industry fundamentals and the stimulus from major projects to produce solid business opportunities through the balance of 2023 and into 2024. As an indication of our confidence in the continuation of this favorable industry environment, we have raised our 2023 gross capital expenditures to a range of $600 million to $650 million, up from a previous range of $500 million to $550 million. Also, we have raised our anticipated 2023 branch additions to a range of 12 to 15 locations, up from 10 to 15 locations."
Total revenues for the first six months of 2023 were $682.7 million, compared to $567.1 million for the first six months of 2022, a 20.4-percent increase. Equipment rental revenue for the first six months of 2023 totaled $553.5 million compared to $426.8 million for the first six months of 2022, a 29.7-percent hike.
Headquartered in Baton Rouge, La., H&E Equipment Services is No. 5 on the RER 100.